Rising tide of foreclosures in Monroe County

After a lull in 2011, foreclosure filings have skyrocketed this year and are on pace to set an all-time record in Monroe County. Through the end of August, 1,444 new foreclosures were filed. That's more than all of last year, when 1,270 were recorded.

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By HOWARD FRANK

poconorecord.com

By HOWARD FRANK

Posted Oct. 28, 2012 at 12:01 AM

By HOWARD FRANK
Posted Oct. 28, 2012 at 12:01 AM

» Social News

After a lull in 2011, foreclosure filings have skyrocketed this year and are on pace to set an all-time record in Monroe County.

Through the end of August, 1,444 new foreclosures were filed. That's more than all of last year, when 1,270 were recorded.

The previous record was in 2010, when 2,029 foreclosures were filed.

The increase might mark a maturing of the crisis.

"At first, when the problem started four years ago, banks were working more with owners and not filing foreclosures right away," said George Hanzimanolis, former president of the National Association of Mortgage Brokers and owner of Banker's First Mortgage in Tannersville.

"They were actually paying the real estate taxes and working with the owners. About two years ago, the banks threw their hands up and started to file the foreclosures."

By the end of July, Monroe had surpassed all of last year's total foreclosure filings.

The Prothonotary's Office, which oversees the filings, projects 2,180 foreclosure filings this year — a 72 percent jump from last year.

That flies in the face of recent reports that foreclosures around the nation in September were the lowest in five years.

"I think there are still a lot of problems in Monroe County with economic activity," said Matt Prosseda, CEO of First Keystone Community Bank. "We still see economic weakness in Monroe County, and it may be lagging the national economy."

Steeply rising home prices last decade led to a backlash. The more the pendulum swings in one direction, the more it swings back.

"As prices rose, a lot of people bought and had a high level mortgage," Prosseda said. "As the values dropped significantly, their mortgages were a lot higher than the value of their property."

That's led to some owners just walking away from their homes, leaving banks with the homes.

Prices never rose as high in Columbia County, where First Keystone is headquartered. And it hasn't seen the level of foreclosures Monroe has experienced.

"Some of the areas in the country that didn't see that big a swing, so they came out of it (the foreclosure crisis) quicker," Prosseda said. "In Columbia, we didn't have the real go-go times."

The last decade also saw lending practices like subprime loans and no-proof-of-income mortgages that extended loans where the likelihood of them being repaid was low.

What the figures don't show is the huge administrative backlog in processing foreclosure filings in the Monroe County.

"When a bank starts a foreclosure proceeding, it takes over two years before it ends up going to sale," Hanzimanolis said. "In other areas the process is much quicker — say three to six months. Carbon County is a good example. It's three months there."

It's longer here because of the sheer number of foreclosures and the bottlenecks in the administrative process that the flood of foreclosures create.

"There are so many foreclosures in this area, and the sheriffs' office can only handle so much. There are so many more filings per month than sales, so the list get longer and the wait gets longer," Hanzimanolis said.

Part of the delay is the legal process in Monroe to protect homeowners.

It requires remediation before a bank can go to sale on a foreclosed home. That process brings the lender and homeowner together to try to work out a payment schedule that could satisfy both parties.

Agencies involved in that process, like Consumer Credit Counseling Services of Northeastern Pennsylvania, are also limited in resources and often are weeks away from scheduling first appointments with the parties.

There are also several bottlenecks in the process.

Once a foreclosure notice is filed, the homeowner is notified of the voluntary remediation process and, upon enrollment, is given a court date. The owner must meet with a housing counselor 60 days prior to the court date to submit an application to the bank before the court date, as if they were doing a loan modification.

Ultimately the homeowner and a representative of the bank meet with a court-appointed attorney acting as conciliator to remediate a settlement between the owner and lender to stave off foreclosure.

Sometimes documentation is needed at the first remediation meeting and the case is continued for a few weeks.

"The entire process from enrollment to their court date could take several months," said Craig Selner, director of counseling for Consumer Credit Counseling Services.

Should the remediation process prove unsuccessful, the bank can proceed with the foreclosure.

"I think at the end of 2013 it will be a three-year, rather than a two-year delay," Hanzimanolis said. "And I don't see it get any better."